The electricity sector of Kyrgyzstan will receive support from the World Bank and the Government of Switzerland. The Embassy of Switzerland in the Kyrgyz Republic reported.
According to the diplomatic mission, the Ministry of Finance of the Kyrgyz Republic and the World Bank signed an agreement for an $8 million grant funding provided by the Swiss Government as a contribution to the Electricity Sector Modernization and Sustainability Project led by the World Bank.
It is noted that this priority sector of the country is facing problems that have accumulated and aggravated over the years. There is a shortage of electricity in the country, caused by its insufficient generation, especially in winter.
The total energy loss in the sector is about 20 percent, more than double the commercial and technical losses in high-income and some middle-income countries. About half of the generating capacity and up to 70 percent of distribution assets have already reached their end of life, leading to frequent power outages due to equipment failures and overloads across the country.
Donors note that the Kyrgyz Republic has one of the lowest electricity tariffs in the world. The sector is heavily indebted, with a total debt of over 137 billion soms (equivalent to about $1.5 billion), or about 20 percent of GDP, placing a heavy financial burden on the country.
«By joint efforts, we will be able to implement anti-crisis measures to stabilize the economy and minimize economic risks for Kyrgyzstan,» said the Finance Minister Almaz Baketaev.
The project, totaling $58 million, will provide funding for urgent investments in four main areas:
- Reconstruction and modernization of distribution networks;
- Digitalization of distribution networks;
- Strengthening social protection systems;
- Institutional development to facilitate the development and implementation of priority reforms in the energy sector.
«This winter, Kyrgyzstan has reached a historic peak in electricity consumption, forcing the country’s power specialists to make tremendous efforts to get through the autumn-winter period. There is an urgent need to modernize the energy sector and its sustainable development as a true engine of the country’s green growth,» said Naveed Hassan Naqvi, World Bank’s Country Manager for the Kyrgyz Republic.
The World Bank fully supports the position of the Cabinet of Ministers regarding the development of the energy sector and supports its proposed reform roadmap for the next decade.
Hassan Naqvi
Swiss Ambassador to Kyrgyzstan Olivier Bangerter noted that the new project would help improve financial performance, ensure reliable power supply for the population and businesses, and create a social protection mechanism for vulnerable groups.
Implementation of the project for the modernization and sustainable development of the electric power sector is planned until 2028 in accordance with all international standards, including procurement and financial management rules, as well as anti-corruption principles.
